AFG Competition Index – January 2015

Non-major lenders grab unprecedented 41% of refinancing loans

Non-major lenders wrote 41.4% of all new refinancing loans in December according to AFG, Australia’s largest mortgage broker. This is the highest proportion of home loans nonmajors have achieved in any home loan category since the GFC. AFG’s quarterly Competition Index shows that non-major lenders increased their share of refinancing loans from 28.4% in January 2014 to 41.4% by December – an increase of 45% over the year.

The success of non-major lenders in this category boosted their overall share of mortgages processed to an all-time high of 32.3% in December. This compares with a share of 24.0% of all home loans processed in January last year.

Mark Hewitt, General Manager of Sales and Operations says: ‘2014 was the most vigorous year of competition since the GFC, and there’s every indication that this trend will continue in 2015. Some are predicting a slowdown in market growth this year and this will intensify competition even further. In particular I am expecting the majors to hit back hard in the next quarter.’

Non-majors accounted for 41.4% of refinancing loans, 38.7% of fixed rate loans, and 31.5% of first home buyer loans in December. In an investor-driven market, major lenders still account for 73.3% of all new investor loans, although this is lower share than the 80.3% they held in January last year.

Suncorp was by far the strongest overall performer among non-major lenders, with 9.7% of all new home loans in December. Macquarie accounted for 5.4%, ING for 3.7% and Heritage Bank for 2.4% of all new home loans.

Suncorp’s strength was based on its highly successful penetration of the refinancing sector, where it accounted for 16.4% of all new home loans in December – more than any lender except for ANZ (17.6%)

Among the major lenders, 16.3% of loans processed in December were for ANZ, 14.8% for CBA, and 12.8% for Westpac. ANZ’s strength was underpinned by its relative success among the majors in the refinancing sector (17.6% compared to the next highest Westpac on 10.2%). Westpac continued to be strongest in the investor category, accounting for 17% of new investor loans, compared with 15.6% for ANZ and 13.5% for CBA.

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